Abstract
The Fund is facing strong demand for financing from low-income countries (LICs).
Summary of Consultations
The Review has benefited from extensive consultations with a range of stakeholders. A brief summary of the consultations and the key findings are detailed below.
A. Consultations with Senior Country Officials
1. Staff consulted with country authorities in several ways. A closed-door roundtable discussion with low-income country (LIC) authorities took place in the margins of the 2017 Annual Meetings. Staff also conducted structured interviews with key counterparts in ministries of finance and central banks. These interactions showed general support for the reforms to the LIC toolkit undertaken since 2009 and a broad assessment that the experience so far has been mostly positive. Country authorities flagged points in the following areas:
2. Resource envelope and access: The Review should consider the overall package of resources available to finance the Fund’s concessional facilities, including other financing options given that current access limits to the concessional resources are viewed as too low by borrowing countries. Some country officials called for the Fund to be more flexible in the provision of budget support from the Fund, and others suggested that Fund instruments needed to do more to address infrastructure/investment gaps, whether directly or by allowing more room for borrowing from other creditors. The link with the Debt Sustainability Framework remains a problematic issue for some countries.
3. Flexibility: The Fund’s facilities should, in general, be more flexible. They could be better tailored to support natural disaster preparedness and to help the Fund play a more catalytic role, whereby its lending programs induce other providers of finance to invest or lend; country authorities would like the Fund to be flexible in setting debt limits in Fund-supported programs. Some also considered that the Fund could be more flexible in usage of the Rapid Credit Facility (RCF), e.g., by relaxing limitations on repeat use.
4. Precautionary support: The absence of a true insurance instrument for LICs is considered a gap in the toolkit. Blending of the Standby Credit Facility (SCF) and Standby Arrangement (SBA) is cumbersome, and the two-year time limit is constraining. The availability fee was also flagged as a concern. Moreover, some country authorities expressed interest in precautionary support with lower conditionality.
5. Speed: Country authorities would, in general, like the Fund to put programs in place much more rapidly than is the case at present, given their pressing financing needs.
6. Natural disasters and other shocks: There is a need to review the adequacy of Fund facilities to provide financial assistance in the case of natural disasters and other emergencies. Better designed instruments might also be needed for countries facing security-related shocks.
B. Survey of Mission Chiefs
7. During May-June 2017, current and former mission chiefs of PRGT-eligible countries provided feedback on their experience with the LIC facilities through a survey. The overall participation rate was good, with 30 mission chiefs responding, covering 39 countries. The survey was followed by two roundtable discussions with senior staff from area and functional departments.
8. Most mission chiefs thought that the Fund’s LIC facilities toolkit was working well overall, with enhanced flexibility following recent reforms, and that it provided a relatively clear set of options in responding to diverse needs. They particularly welcomed the access increase, which was beneficial for the Fund’s engagement with LICs. A few mission chiefs highlighted the need to make the existing facilities more flexible, instead of creating new ones for specific purposes.
9. Many mission chiefs highlighted positive changes, including higher access, more parsimonious conditionality, streamlined operational procedures, flexibility on precautionary support, and lower interest rates. Several mission chiefs also appreciated the new blending rules, the possibility to augment access between reviews, the extended duration for Extended Credit Facilities (ECFs), the catalytic role of the facilities, and the new debt limits policy. One mission chief noted that the guidance note on countries in post-conflict and fragile situations was very helpful for program work. Only a few mission chiefs had difficulties finding an appropriate instrument for their countries’ needs, due to difficult political circumstances, lack of clarity on a path to re-engagement, and restrictions on the use of Staff-Monitored Programs (SMPs) when there is no intention to move to a UCT-quality program. Several mission chiefs called for a reassessment of the Fund’s engagement with fragile states, and evaluate if a new facility was needed or existing instruments could be tweaked.
10. Most mission chiefs considered access policies to be broadly appropriate, while some reported that the authorities had challenged access levels as too low. It was also noted that the blending threshold was a bit arbitrary, and a concern was raised on whether blended arrangements should be offered to countries hit by large shocks requiring more balanced adjustment-financing mixes. While mission chiefs considered the current financing terms broadly appropriate, several noted that the authorities and donors had challenged the Fund’s concessional financing terms which do not meet the minimum concessionality standard of a 35 percent grant element. Most mission chiefs felt that program modalities are generally appropriate, although a few of them saw the Economic Development Document (EDD) requirements as burdensome, and Board documentation requirements too onerous. Some mission chiefs suggested relaxing the preconditions for starting program negotiations and streamlining operational aspects of the Lending into Arrears policy.
C. Consultations with Civil Society Organizations (CSOs)
11. An online consultation was launched on November 2, 2017 and closed on December 8, 2017.1
12. Within the scope of the current review, CSOs’ main comments focused on the Fund’s responses to natural disasters. They argued that non-PRGT-eligible small states should have access to concessional emergency Fund financing. As regards post-disaster financing, CSOs favor grants rather than loans (though the comments did not specify whether grants should be provided by the Fund or by other donors). CSOs also argued that the Fund’s response to disasters should include state-contingent debt restructuring and other debt relief, for a broader set of eligible countries.
13. Outside the scope of this review, the CSOs also commented on program design issues. In particular, CSOs raised concerns about rising numbers of structural conditions in LIC lending, the impact of conditionality on social spending (the comments disputed recent Fund research), and perceived “unsystematic” Fund advice on gender and economic inequality.
Comparison Between PRGT and GRA Facilities
There are many similarities between the Fund’s facilities for LICs provided under the Poverty Reduction and Growth Trust (PRGT) and those provided under the General Resource Account (GRA), but financing provided through the former comes with longer maturities and lower interest costs than is the case with GRA counterpart facilities.
| PRGT | GRA counterparts |
|---|---|
| Extended Credit Facility (ECF) | Extended Fund Facility (EFF) |
| Standby Credit Facility (SCF) | Stand-By Arrangement (SBA) |
| Rapid Credit Facility (RCF | Rapid Financing Instrument (RFI) |
| PRGT | GRA counterparts |
|---|---|
| Extended Credit Facility (ECF) | Extended Fund Facility (EFF) |
| Standby Credit Facility (SCF) | Stand-By Arrangement (SBA) |
| Rapid Credit Facility (RCF | Rapid Financing Instrument (RFI) |
14. Maturities: Lending under the PRGT has longer repayment and grace periods than under the GRA:
Loans provided under the ECF and EFF each have a maturity of 10 years, but with a longer grace period for the former (5½ vs. 4½ years).
Loans provided under the SCF and the SBA have maturities of eight and five years, respectively.
Loans provided under the RCF and RFI have maturities of ten and five years, respectively.
15. Interest rates:
Loans provided under the PRGT facilities carry an interest rate linked to global interest rates, ranging from 0 percent to a maximum of 75 basis points, with a higher spread on the (short-term) SCF than on the ECF, thus encouraging longer-term borrowing.
For GRA lending, a basic rate is charged at the SDR interest rate plus a fixed margin set annually, with surcharges related to the amounts and time that credit is outstanding (but invariant to the facility used), thus encouraging early repayments.
16. Access limits and norms:
Regular access to PRGT facilities is subject to annual and cumulative limits of 75 and 225 percent of quota; the corresponding GRA limits are 145 and 435 percent of quota. The PRGT also includes access ‘norms’ for use as an input to access decisions, but these norms are neither limits nor floors on access.
Exceptional access to PRGT facilities is available in principle but only to a subset of (poorer) PRGT-eligible countries and is subject to annual and cumulative limits (100 and 300 percent of quota, respectively). There are no quantitative limits to exceptional access under the GRA, but larger borrowing levels incur surcharges.
While access to the PRGT facilities are subject to hard limits, access to Fund resources for PRGT-eligible countries is not subject to any hard limit because these countries can also access GRA facilities.
The PRGT’S Self-Sustained Capacity and Demand for Concessional Resources
The PRGT’s self-sustaining financing framework seeks to accommodate new concessional lending at an average annual level of SDR 1¼ billion in perpetuity without the need for regular grant contributions from the Fund’s membership. The framework’s adequacy is assessed annually in terms of i) the long-term capacity to finance concessional lending activities from PRGT resources; and ii) the projected longer-term demand for concessional resources. The concessional framework is presently assessed as adequate from both these perspectives. For details see the latest Update of the Financing of the Fund’s Concessional Assistance (IMF, 2018).
17. The resources under the PRGT differ in important respects from those of the General Resources Account (GRA). Whereas lending under the GRA is financed in large part from the Fund’s quota resources, the PRGT does not have a comparable dedicated financing source. Rather, PRGT loan resources are provided on a voluntary basis by individual member countries (PRGT loan contributors) at market rates and then on-lent to PRGT-eligible members at subsidized rates in a program context. These loan resources are non-revolving and need to be replenished on a regular basis through new borrowing agreements to ensure the PRGT has sufficient liquidity to sustain its operations. Another key difference relates to the concessional nature of PRGT lending that involves interest rate subsidies across its facilities. These subsidy costs are financed from balances in the PRGT subsidy accounts and income on investments under the PRGT.
18. In 2012, a three-pillar strategy was adopted to ensure a self-sustained lending capacity capable of meeting projected long-term demand for IMF concessional resources (IMF, 2012). Apart from supporting (i) a base envelope of SDR 1¼ billion in permanent annual average lending capacity—which is expected to cover concessional lending needs over normal periods—the strategy envisages: (ii) contingent measures that can be invoked if average financing needs exceed the base envelope by a substantial margin for an extended period;2 and, (iii) a principle of self-sustainability under which modifications of PRGT lending policies should ensure that the demand for concessional lending can be met with available resources.
19. The adequacy of the PRGT’s self-sustained framework is reviewed annually from two analytical perspectives:
i. The estimate of the PRGT’s permanent annual lending capacity is updated, and tested against a variety of potential shocks.
ii. In parallel, the long-term demand for concessional resources under different scenarios is updated to derive a range of plausible estimates of the average annual concessional lending needs. A range of scenarios is preferred over baseline projections, given observed volatility in annual demand and inherent uncertainties, especially in the long run (Box 1).
20. The self-sustained lending capacity represents the average level of new concessional lending commitments the Trust can finance in perpetuity. Using a cash-flow model, the permanent lending capacity is derived as the level where current and future subsidy resources cover current and future subsidy needs from lending at such a level. Available subsidy resources are affected, inter alia, by the initial balances of the PRGT Subsidy and Reserve Accounts, investment returns on those balances, and the reimbursement to the GRA for administrative expenses. Subsidy needs depend on the PRGT credit outstanding over time (resulting from near-term demand for concessional resources and the long-term lending in line with the capacity level solved by the model) and the subsidy element of PRGT loans, determined by the spread between interest rates paid to PRGT loan providers and the concessional rates set for loans under the PRGT facilities.
21. Longer-term demand projections are modelled based on two benchmark scenarios. Demand projections for the next 20 years are derived according to a demand model, which estimates annual concessional resource commitments based on historical averages reflecting the likelihood of arrangements and parameters for program size in line with existing policies on access norms and limits. The long-term PRGT demand model is based on the following key assumptions (IMF, 2011):
Frequency of program requests. Two benchmark scenarios are considered based on historical observations of minimum and maximum demand for different types of users and facilities and assumptions on possible future demand shifts between facilities. A low-case scenario assumes that about 30 percent of PRGT-eligible countries resort to Fund financing in any given year, while a high-case scenario assumes that 55 percent of LICs request some form of Fund financial support in any given year. The assumed average access level is based on existing access policies, factoring in an assumed periodic general increase in access levels/limits across facilities that broadly match projected GDP developments and financing needs (these increases are currently assumed to occur every three years, consistent with the former three-year cycle for facilities reviews).
PRGT-eligibility and blending. Countries’ PRGT-eligibility and whether they are presumed to blend are projected based on income per capita, market access and debt vulnerability criteria in the short term, and only on an income per capita criterion in the longer term.3
22. Staff’s most recent assessment considers that the three-pillar PRGT’s self-sustaining financing framework remains intact (IMF, 2018). The PRGT’s permanent lending capacity is estimated at SDR 1.31 billion annually, slightly above the target of SDR 1¼ billion, and is robust to a range of near-term demand shocks. It is more sensitive to the evolution of a number of supply-side factors affecting available subsidy resources (e.g., excess return premium on investment income or subsidy contributions from pledges by donors), which are monitored on an ongoing basis. At the same time, longer-term demand is projected to average between SDR 1.0 and 1.7 billion annually over the next ten years under a range of plausible scenarios. This is broadly consistent with the self-sustaining PRGT financing framework. If demand estimates were to shift clearly above (or below) the PRGT lending capacity, it would indicate that current policies (including those governing eligibility, blending, access, and financing terms) are not sustainable (or overly restrictive) over the longer term and would need to be reviewed, possibly alongside contingency measures envisaged under the three-pillar strategy.
The Role of Demand Volatility in Assessing the Adequate Size of the PRGT
Demand for concessional resources is historically volatile. While program commitments (incurred at the time of program approval) and annual disbursements are both measures of demand, Fund resources are managed on a commitment basis. This is a critical safeguard to the membership that ensures the Fund can always fulfill its resource obligations. 1/ On either basis, the demand for concessional resources exhibits considerable volatility, especially on a commitment basis as disbursements under a new arrangement are generally tranched over several years.
Demand for PRGT Resources
(in SDR millions)
Citation: Policy Papers 2018, 039; 10.5089/9781498310871.007.A002
1/ Based on one standard deviation.Demand for PRGT Resources
(in SDR millions)
Citation: Policy Papers 2018, 039; 10.5089/9781498310871.007.A002
1/ Based on one standard deviation.Demand for PRGT Resources
(in SDR millions)
Citation: Policy Papers 2018, 039; 10.5089/9781498310871.007.A002
1/ Based on one standard deviation.Notwithstanding year-to-year volatility, demand has in recent years also been broadly consistent with the PRGT’s lending capacity target. On a commitment basis, demand has averaged SDR 1.3 billion per year over the past ten years, very close to the nominal target under the three-pillar strategy of about SDR 1¼ billion. Disbursements have been lower than commitments—averaging some SDR 0.9 billion over the same period—largely reflecting programs that went off track and undisbursed amounts under precautionary SCF arrangements.
The degree of volatility and ex-post differences between commitments and disbursement can affect the assessment both of long-term demand and of the long-term lending capacity, but these effects are manageable under the three-pillar self-sustaining framework. For instance, while a spike in commitments would decrease the estimate of long-term capacity, the effect would only be significant in the event of sustained periods of very high demand. Even then, the three-pillar framework foresees potential contingent measures to remain close to the capacity target of SDR 1¼ billion (see IMF, 2018 for detailed shock scenarios). Similarly, the savings in subsidy resources resulting from near-term disbursements ending up lower than projected near-term commitments would generally only have marginal effects on the long-term capacity.
1/ Consequently, PRGT resources are ring-fenced once they are committed (even on a precautionary basis). Committed resources that remain undrawn are released after a program expires and become available for other countries. Similarly, commitments under GRA arrangements (whether disbursing or precautionary) are ring-fenced in the calculation of the Fund’s Forward Commitment Capacity, reducing the Fund’s uncommitted usable resources one-to-one.Access Norms in the PRGT
Norms guide access decisions to concessional financing and inform estimates of the PRGT’s self-sustained lending capacity. Continuous use of concessional financing at or below the norm is possible without reaching the normal cumulative access limit.
23. The role of norms in access decisions. The norm as a concept has evolved and is generally understood to represent a measure of “average expected access.” While norms can provide a focal point for the assessment of the appropriate level of access—particularly when data is poor— individual access decisions should be determined case-by-case based on balance of payments (BoP) needs, program strength, outstanding use of Fund credit and record of past use, and capacity to repay the Fund that is informed by debt sustainability analysis (IMF, 2016b). Norms represent neither a floor nor a ceiling or entitlement for specific arrangements. As such, it is expected that access levels will exhibit some variation around the norm in practice (IMF, 2016a).
24. PRGT’s self-sustained capacity. The PRGT’s self-sustained framework requires that average annual lending capacity is sufficient to meet projected total demand over the long term, which in turn is assessed at the norm on average. However, the PRGT’s self-sustained capacity does not hinge on average demand always being at the norm. The framework is robust to shocks where average financing needs exceed the baseline demand by a substantial margin for several years. Apart from a base envelope of SDR 1¼ billion in annual lending capacity, the three-pillar framework foresees contingent measures when demand exceeds the base envelope by a substantial margin for a sustained period, and a principle of self-sustainability under which any modifications to PRGT facilities should be designed to maintain financial self-sustainability.
25. Relation to access limits. Repeated access at, or below, the norm can effectively enable continuous use of concessional financing without ever reaching the normal cumulative access limit. “High-access” norms apply if credit outstanding is below one-third of the cumulative PRGT access limit (75 percent of quota), “low-access” norms apply if credit outstanding is between above one-third and below two-thirds of the cumulative limit (75 and 150 percent of quota, respectively), while no norms apply when it exceeds two-thirds of the cumulative access limit (150 percent of quota).
Toolkit of Fund Facilities for PRGT-Eligible Countries
26. The current toolkit of facilities for PRGT-eligible countries is the result of a comprehensive reform undertaken in 2009, which created three concessional facilities (the ECF, SCF, and RCF), in addition to existing nonfinancial instruments (Policy Support Instrument (PSI) and SMP).
27. ECF: provides financial assistance to countries with protracted balance of payments (BoP) problems. It supports countries’ economic programs aimed at moving toward a stable and sustainable macroeconomic position consistent with strong and durable poverty reduction and growth.
Eligibility: countries facing a protracted BoP problem, i.e., when the resolution of the underlying macroeconomic imbalances would be expected to extend over the medium or longer term.
Duration and repeated use: initial duration of 3–4 years, extendable to 5 years. Consecutive ECF arrangements may be approved. Precautionary use of the ECF is not envisaged.
Highly concessional lending terms: zero interest rate at least through end-2018 (thereafter governed by PRGT interest rate setting mechanism), grace period of 5½ years, and final maturity of 10 years.
28. SCF: provides financial assistance to LICs that have reached broadly sustainable macroeconomic positions, but may experience episodic, short-term financing and adjustment needs, including those caused by shocks.
Eligibility: countries facing an immediate or potential BoP need, where the financing and adjustment needs are normally expected to be resolved within 2 years, thus establishing a sustainable macroeconomic position.
Duration and repeated use: can range from 12–24 months. To address episodic short-term needs, therefore, use is normally limited to 2½ out of any 5 years. Subject to these limits, extensions and consecutive arrangements may be approved.
Precautionary arrangements: in case of potential but not immediate BoP need, access can be treated as precautionary. SCF arrangements treated as precautionary do not count toward the 2½ out of any 5 years’ time limit. Consequently, there are no limits on successive SCF arrangements provided they remain precautionary.
Concessional lending terms: zero interest rate at least through end-2018 (thereafter governed by the PRGT interest rate mechanism), grace period of 4 years, and final maturity of 8 years. An availability fee of 0.15 percent per annum is levied on the undrawn amounts available for drawing during each six-month period.
29. RCF: provides low-access, rapid, and concessional financial assistance with limited conditionality to LICs facing an urgent BoP need. It can provide support in a wide variety of circumstances, including shocks, natural disasters, and emergencies resulting from fragility.
Eligibility: countries facing an urgent BoP need where a full-fledged economic program is either not necessary (e.g., because of the transitory and limited nature of the shock) or not feasible (e.g., because of capacity constraints or domestic fragilities).
Duration and repeated use: outright loan disbursement. Often one-off disbursements, as in the case of an urgent BoP need of limited duration (in particular under the shocks window). Repeated use is possible within any three-year period if the BoP need is caused primarily by an exogenous shock or the country has established a track record of adequate macroeconomic policies. For countries seeking repeated RCF disbursements to build a track-record, e.g., fragile states, concurrent use of an SMP is encouraged. A maximum of two disbursements in any 12-month period is allowed. Repeated use may facilitate transition to an ECF.
Highly concessional lending terms: zero interest rate, grace period of 5½ years, and final maturity of 10 years.
30. PSI: this non-financial instrument offers LICs that do not want or need Fund financial assistance a tool to secure Fund advice and support without a borrowing arrangement. It can help countries design effective economic programs that deliver clear signals of the Fund’s endorsement of the strength of a member’s policies.
Eligibility: countries that have no current or prospective BoP need requiring any significant macroeconomic policy adjustment (but may still benefit from structural reforms), and that have institutions of sufficient quality to support continued good performance.
Duration and repeated use: initial duration of 1–4 years, extendable to a maximum of 5 years. Successive PSIs may be requested as long as the country continues to qualify.
Use with financial instruments: cannot be used concurrently with the ECF. It can be used in conjunction with an RCF or SCF, if short-term financing needs arise, or with a precautionary SCF in periods of increased uncertainty or risk.
31. SMP: informal agreements between Fund staff and national authorities to monitor implementation of an economic program, with a view to establishing a track record of policy implementation that could pave the way for a new financial arrangement or RCF disbursement, or for resuming an existing off-track arrangement.
Eligibility: available to all Fund members (not only PRGT-eligible members).
Duration and repeated use: normally expected to cover a minimum of 6 months, and not to exceed 18 months, while longer durations are not precluded. Repeated use is possible.
Use with financial instruments: can be used concurrently with the RCF.
PRGT Access Policy
32. Access to PRGT financing is determined on a case-by-case basis, taking into account the country’s BoP need, the strength of the economic program, the amount of outstanding Fund credit and the member’s record of past use of Fund credit, and capacity to repay the Fund, informed by debt sustainability analysis. Access norms are a starting point for a discussion of the appropriate access level.4
PRGT Exceptional Access
33. In exceptional circumstances, access above the normal limits can be made available to countries with: (i) an exceptionally large BoP need that cannot be met within the normal limits; (ii) a comparatively strong adjustment program and ability to repay the Fund;5 and (iii) no sustained past and prospective access to capital markets, and income at or below the prevailing IDA operational cutoff. Exceptional access is subject to hard caps of 100 percent of quota annually and 300 percent of quota on a cumulative basis, net of scheduled repayments, across all concessional facilities.
34. Procedural safeguards apply for financing requests that involve exceptional access, including requiring a new DSA and an early informal Board meeting, which, inter alia, is expected to reference the impact on the Fund’s concessional resources (drawing on the latest available paper on concessional resources). For requests involving financing commitments that, in absolute terms, would have a large impact on the Fund’s overall concessional resources, an early notice to the Board is expected.
Blending of PRGT and GRA Resources
35. PRGT-eligible countries are presumed to receive Fund financial support in the form of a blend (in the ratio of 1:2) of PRGT and GRA resources when:
the country’s per capita income level is above the prevailing IDA operational cutoff or the country’s per capita income level exceeds 80 percent of the IDA operational threshold and the country has sustained past and prospective market access; and
the country is not assessed to be at high risk of debt distress or in debt distress.
36. Countries that do not meet these conditions (and hence are not “presumed blenders”) are expected to meet their financing needs from PRGT resources. In cases where these financing needs exceed applicable PRGT access limits, the additional financing need can be met with GRA resources.
37. In all cases, access needs are determined by such factors as balance of payments need, program strength, the amount of outstanding Fund credit and the member’s record of past use of Fund credit, and capacity to repay the Fund, informed by debt sustainability analysis.
Interest Rate Mechanism
38. In October 2016, the Executive Board approved a modification of the mechanism governing interest rate setting of PRGT facilities and set interest rates to zero on all Fund concessional loans under the PRGT for at least the next two years through end-December 2018. The interest rate for the RCF was set permanently to zero in July 2015. The Fund reviews the level of interest rates for concessional facilities under the PRGT every two years, with the next review expected to take place before end-2018.
Summary of Norms, Limits, and Procedural Safeguards
The new access limits in effect from January 26, 2016 do not affect disbursements under arrangements approved prior to that date and any changes in access levels is to be justified by balance of payments needs in accordance with the standard policies for augmentation of access amounts. Outstanding PRGT credit in existence as of January 26, 2016 counts towards the current annual and cumulative PRGT access limits.
Any RFI access also counts towards these limits.
Norms provide guidance on what may constitute an appropriate level of access under PRGT facilities, but they should not be misconstrued as access limits or entitlements.
High access norms apply if PRGT credit outstanding is less than 75 percent of quota. Norms are not applicable if PRGT credit outstanding >150 percent of quota. In such cases, access is guided by consideration of the cumulative access limit of 225 percent of quota under PRGT facilities (300 percent of quota in exceptional cases), the expectation of future need for Fund support, and the repayment schedule.
For four-year ECF arrangements, access for the fourth year is expected to be set in line with the average annual access corresponding to the norm that would otherwise have applied to a successor three-year ECF arrangement. For countries whose outstanding PRGT access is above 150 percent of quota, the norms do not apply.
For SCF arrangements of any other length, the norms will be proportionately adjusted to keep annualized average access unchanged.
For the RCF, which has no norm, the cap on access to concessional resources is the annual limit, while for the SCF treated as precautionary this cap applies to the average annual access limit.
A new DSA is also required for any PRGT financing request if it involves exceptional access to concessional resources or involves a member with high risk of debt distress or in debt distress.
An early informal meeting is also required if the financial request would involve exceptional access to concessional financing.
Summary of Norms, Limits, and Procedural Safeguards
| Access Limits | Current (14th General Quota Review) 1/ | |
|---|---|---|
| Cumulative access limits | ||
| All PRGT facilities-normal | 225 | |
| All PRGT facilities-exceptional | 300 | |
| RCF 2/ | 75 | |
| RCF (exogenous shocks window) 2/ | 75 | |
| RCF (large natural disasters window) 2/ | 75 | |
| RFI | 75 | |
| RFI (large natural disasters window) | 75 | |
| Annual access limits | ||
| All PRGT-facilities-normal | 75 | |
| All PRGT-facilities-exceptional | 100 | |
| SCF (precautionary) – average annual | 37.5 | |
| SCF (precautionary), at approval | 56.25 | |
| RCF 2/ | 18.75 | |
| RCF (exogenous shocks window) 2/ | 37.5 | |
| RCF (large natural disasters window) 2/ | 60 | |
| RFI | 37.5 | |
| RFI (large natural disasters window) | ||
| Norms 3/4/ | ||
| 3-year ECF – High access 5/ | 90 | |
| – Low access | 56.25 | |
| 18-month SCF – High access 6/ | 90 | |
| – Low access | 56.25 | |
| Blending proportions applicable to members presumed to blend (PRGT:GRA) 7/ | 1:2 with concessional access capped at the applicable norm (all GRA thereafter) | |
| Triggers for procedural safeguards on high access requests | ||
| Total access in any 24-month period—for DSA (update) 8/ | 60 | |
| Total access in any 36-month period—for an informal | ||
| Board Meeting in advance of new PRGT request 9/ | 135 | |
The new access limits in effect from January 26, 2016 do not affect disbursements under arrangements approved prior to that date and any changes in access levels is to be justified by balance of payments needs in accordance with the standard policies for augmentation of access amounts. Outstanding PRGT credit in existence as of January 26, 2016 counts towards the current annual and cumulative PRGT access limits.
Any RFI access also counts towards these limits.
Norms provide guidance on what may constitute an appropriate level of access under PRGT facilities, but they should not be misconstrued as access limits or entitlements.
High access norms apply if PRGT credit outstanding is less than 75 percent of quota. Norms are not applicable if PRGT credit outstanding >150 percent of quota. In such cases, access is guided by consideration of the cumulative access limit of 225 percent of quota under PRGT facilities (300 percent of quota in exceptional cases), the expectation of future need for Fund support, and the repayment schedule.
For four-year ECF arrangements, access for the fourth year is expected to be set in line with the average annual access corresponding to the norm that would otherwise have applied to a successor three-year ECF arrangement. For countries whose outstanding PRGT access is above 150 percent of quota, the norms do not apply.
For SCF arrangements of any other length, the norms will be proportionately adjusted to keep annualized average access unchanged.
For the RCF, which has no norm, the cap on access to concessional resources is the annual limit, while for the SCF treated as precautionary this cap applies to the average annual access limit.
A new DSA is also required for any PRGT financing request if it involves exceptional access to concessional resources or involves a member with high risk of debt distress or in debt distress.
An early informal meeting is also required if the financial request would involve exceptional access to concessional financing.
Summary of Norms, Limits, and Procedural Safeguards
| Access Limits | Current (14th General Quota Review) 1/ | |
|---|---|---|
| Cumulative access limits | ||
| All PRGT facilities-normal | 225 | |
| All PRGT facilities-exceptional | 300 | |
| RCF 2/ | 75 | |
| RCF (exogenous shocks window) 2/ | 75 | |
| RCF (large natural disasters window) 2/ | 75 | |
| RFI | 75 | |
| RFI (large natural disasters window) | 75 | |
| Annual access limits | ||
| All PRGT-facilities-normal | 75 | |
| All PRGT-facilities-exceptional | 100 | |
| SCF (precautionary) – average annual | 37.5 | |
| SCF (precautionary), at approval | 56.25 | |
| RCF 2/ | 18.75 | |
| RCF (exogenous shocks window) 2/ | 37.5 | |
| RCF (large natural disasters window) 2/ | 60 | |
| RFI | 37.5 | |
| RFI (large natural disasters window) | ||
| Norms 3/4/ | ||
| 3-year ECF – High access 5/ | 90 | |
| – Low access | 56.25 | |
| 18-month SCF – High access 6/ | 90 | |
| – Low access | 56.25 | |
| Blending proportions applicable to members presumed to blend (PRGT:GRA) 7/ | 1:2 with concessional access capped at the applicable norm (all GRA thereafter) | |
| Triggers for procedural safeguards on high access requests | ||
| Total access in any 24-month period—for DSA (update) 8/ | 60 | |
| Total access in any 36-month period—for an informal | ||
| Board Meeting in advance of new PRGT request 9/ | 135 | |
The new access limits in effect from January 26, 2016 do not affect disbursements under arrangements approved prior to that date and any changes in access levels is to be justified by balance of payments needs in accordance with the standard policies for augmentation of access amounts. Outstanding PRGT credit in existence as of January 26, 2016 counts towards the current annual and cumulative PRGT access limits.
Any RFI access also counts towards these limits.
Norms provide guidance on what may constitute an appropriate level of access under PRGT facilities, but they should not be misconstrued as access limits or entitlements.
High access norms apply if PRGT credit outstanding is less than 75 percent of quota. Norms are not applicable if PRGT credit outstanding >150 percent of quota. In such cases, access is guided by consideration of the cumulative access limit of 225 percent of quota under PRGT facilities (300 percent of quota in exceptional cases), the expectation of future need for Fund support, and the repayment schedule.
For four-year ECF arrangements, access for the fourth year is expected to be set in line with the average annual access corresponding to the norm that would otherwise have applied to a successor three-year ECF arrangement. For countries whose outstanding PRGT access is above 150 percent of quota, the norms do not apply.
For SCF arrangements of any other length, the norms will be proportionately adjusted to keep annualized average access unchanged.
For the RCF, which has no norm, the cap on access to concessional resources is the annual limit, while for the SCF treated as precautionary this cap applies to the average annual access limit.
A new DSA is also required for any PRGT financing request if it involves exceptional access to concessional resources or involves a member with high risk of debt distress or in debt distress.
An early informal meeting is also required if the financial request would involve exceptional access to concessional financing.
References
International Monetary Fund, 2011, “Demand Projections for the Fund’s Concessional Resources” (Washington).
International Monetary Fund, 2012, “The Chairman’s Summing Up: Proposal to Distribute Remaining Windfall Gold Sales Profits and Strategy to Make the Poverty Reduction and Growth Trust Sustainable” (Washington).
International Monetary Fund, 2016a, “Financing for Development: Enhancing the Financial Safety Net for Developing Countries—Further Considerations” (Washington).
International Monetary Fund, 2016b, “The Chairman’s Summing Up: Financing for Development: Enhancing the Financial Safety Net for Developing Countries—Further Considerations” (Washington).
International Monetary Fund, 2018, “Update on the Financing of the Fund’s Concessional Assistance and Debt Relief to Low-Income Countries” (Washington).
The comments received from CSOs are posted at: http://www.imf.org/external/np/exr/consult/2017/licsfacs/pdf/CSOsinputs2018.pdf
Contingent measures include: (i) reaching additional understanding on bilateral fund-raising efforts among a broad range of the membership; (ii) the suspension for a limited period of the reimbursement of the GRA for PRGT administrative expenses; and (iii) modifications of access, blending, interest rate, and eligibility policies to reduce the need for subsidy resources.
The income per capita criterion compares the projected GNI per capita (using WEO projections) with the forecasted IDA operational cut-off while the debt vulnerability criterion precludes graduation/blending before 2021/2023, respectively.
Access norms provide an indicative access level to serve as the starting point in a discussion of access needs; they represent neither ceilings nor entitlements. For details on norms, see the table 1.
This criterion would generally not be met for countries with a high risk of debt distress or in debt distress, unless expected debt relief or restructuring is projected to reduce the risk of debt distress to moderate or low.
